The following Business Case Study “Walk the Talk”. It deals works with these innovative management premises. It is also a good example of an organization that follows its sense of purpose, transmitting it to all stakeholders. As a result, the company vision is shared first by all team members; producing then more passion and affecting all working activities. This radical management practice breaks with the conventional thought while still achieving spectacular results! Above all, what matters most in this shift in the management paradigm, is that this radical model of management is happening in a very commoditized and mature industry. Whole Foods has clearly shown us that, by focussing on workers and their contribution to constant company improvements, core values and customers, it is possible to get a real Competitive Advantage.

1.
Whole
Foods-­‐
Case
Study
A
benchmark
model
of
management
for
hospitality
Arturo
Cuenllas
Soler
The 65-year-old supermarket industry is the last place to look for radical ideas
about work and management. It's a stumbling giant with shrinking sales, razor-
thin margins, and chronic labour troubles. Too often, the shopping experience is
synonymous with bruised produce, bad lighting, long lines, and surly cashiers.
Supermarkets are about brawn not brains -- it's a business where every penny
counts and double coupons qualify as a profound strategic innovation.
-Charles Fishman at Fast Company
1

2. Imagine yourself working in any company surrounded by these working habits: passion,
innovation, transparency, trust, self-management, teamwork, cooperation, federalism,
community, strong sense of belonging, sincerity, integrative leadership, empowerment,
knowledge, flexibility, dialogues, open-book-management, consensus, power of
decision, initiative, pro-activity, commitment, organizational learning and pride in
belonging, “We” instead of “I”…All these post tayloristic management concepts are
usually treated in business schools, management forums, magazines or conferences held
by gurus. These are strong post-bureaucratic working ideals, which are normally seen as
utopian practises of management and seldom put into action. Of course, managers will
recognize the importance of many of these management concepts; they would even
assure that they are committed to some of them. But the reality is a very different
picture, since managers never transform their words into actions. However, Whole
Foods did it. They proved to all that a shift in the paradigm of management is possible,
and, at the same time very profitable. Whole Foods has turned up side down all these
management concepts, often treated with scepticisms, and made from them a new
business model, no longer an utopia dream. A competitive business can be in perfect
balance with stakeholders. Shareholders and profits are certainly important, but no more
important than customers and employees. Whole Foods founder and CEO, John
Mackey, goes even further with his commitment and vision of a Conscious Business
and Conscious Capitalism.
Whole Foods has inspired the Collective Management thesis, and practice, in
hospitality. Today most businesses focus on shareholders and profits. These are Milton
Friedman and the Washington Consensus prescriptions; the main concern of any
business must be to shareholders and its maximization of profits –they will say. This
economic theory says that any other stakeholders such as workers or guests shouldn’t be
put in the same balance. This is the reason why management and managers have rooted
mind-sets and professional bias against such innovative working practices. Continuous
innovation happens if companies are managing with the appropriated leadership,
empowering people and thus unleashing workers' potential. This is the good path to get
any Competitive Advantage in hyper-competitive markets.
The following Business Case Study “Walk the Talk”. It deals works with these
innovative management premises. It is also a good example of an organization that
follows its sense of purpose, transmitting it to all stakeholders. As a result, the company
vision is shared first by all team members; producing then more passion and affecting
all working activities. This radical management practice breaks with the conventional
thought while still achieving spectacular results! Above all, what matters most in this
shift in the management paradigm, is that this radical model of management is
happening in a very commoditized and mature industry. Whole Foods has clearly
shown us that, by focussing on workers and their contribution to constant company
improvements, core values and customers, it is possible to get a real Competitive
Advantage.
What is Whole Foods?
In 1978, twenty-five year old college dropout John Mackey and twenty-one year old
Rene Lawson Hardy borrowed $45,000 from family and friends to open the doors of a
small natural foods store called SaferWay, in Austin, Texas. When the couple got

3. Whole
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A
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for
hospitality
3
booted out of their apartment for storing food products there, they decided to simply
live at the store. Since it was zoned commercial, there was no shower stall. Instead, they
bathed in the Hobart dishwasher, which had an attached water hose.
Two years later, John and Rene partnered with Craig Weller and Mark Skiles to merge
SaferWay with their Clarksville Natural Grocery, resulting in the opening of the original
Whole Foods Market on September 20, 1980. At 10,500 square feet and a staff of 19,
this store was quite large in comparison with the standard health food store of the time.
Today, Whole Foods Market, Inc. is the largest natural-foods grocer in the United States
with more than 300 stores in the U. S., Canada and the United Kingdom. WF's 2012
annual sales are $11 billion, and net profit of $465,5 million. But what does John
Mackey think about money? As he said in an interview: “I still grow in financial success
because I have a numbers of investments that continue to flourish…but WF is trying to
fulfil a deeper purpose, and I have to embody that deeper purpose. The money thing is a
distraction, it´s so easy for people to judge you, saying that you did that, or got a lot of
money…but if you are able to take the money out of the equation then you are doing it
for the "service" to fulfil that mission for the organization, so that it creates a certain
purity in your motive. One thing I know is what the right move is because of how the
team members are responding. Team members are so excited. Why? Because these guys
they really believe in their mission” Like he also said: “purpose inspires people, and
purpose releases creativity”.
Their motto states — Whole Foods, Whole People, and Whole Planet —and emphasizes
that on their vision that reaches far beyond just being a food retailer. Their success in
fulfilling their vision is measured by customer satisfaction, Team Member excellence
and happiness, return on capital investment, improvement in the state of the
environment, and local and larger community support.
Whole Foods stores don't stock products with artificial colours, flavours, or
preservatives; offers as much organic produce as possible; only sell meat and seafood
that are free of chemicals and hormones. WF prides itself on selling the highest quality,
freshest, and most environmentally sound produce. No one could argue that their
selection of organic food and take-away meals are whole, hearty, and totally delicious.
“Whole Foods Market is passionate about helping people to eat well, improve the
quality of their lives, and increase their lifespan. Their purpose is to teach people that
what they put into their bodies makes a difference, not only to their health and to that of
the people who supply the food, but also to the health of the planet as a whole”, Mackey
said. WF is a company very committed to its values, these core values are shared
throughout the organization; (a) Quality Standards: they are very serious about quality
carrying natural and organic products. (b) Organic farming: farming without the
standard array of modern toxic and persistent chemicals commonly used in conventional
food production. They support local farms. (c) Seafood sustainability: they believe that
sustainable seafood comes from responsibly managed fish farms and marine fisheries
that maintain healthy fish populations and ecosystems. (d) Animal welfare rating
standards: It is a tiered rating system developed to rank animal welfare practices and
conditions within farm-animal production systems. (e) Caring for Communities: Each of
their stores has a lot of latitude in deciding the best way to operate that individual store
to meet the needs of the local community. (f) Whole trade guarantee: At Whole Foods
Market, they’re not just about selling groceries; they believe they have a responsibility

4. toward all people involved in their business. This includes shoppers, shareholders, team
members and suppliers as well as producer communities in developing countries.
The Whole Foods strategy combines democracy with discipline in working and
management. The Whole Foods culture braids a strong sense of community with a
fierce commitment to productivity. It's a virtuous circle: rank-and-file participation
reinforces individual attention to performance and profits; solid financial results give
people more freedom to innovate. Mackey imagined the impact if every single person
working for a company were able to be a creator and innovator. A working place, in
which Team members could be enable, capable, empowered and challenged to unleash
their entrepreneurial energy and their creativity to help improve their team, store and
company. He always thought about innovation as a constant business objective also
enhanced from bottom-up. As he mentioned once: “Any organization that depends on a
few geniuses at the top and outside consultants, regardless of how brilliant they are, is at
a competitive disadvantage to businesses that more fully utilize all of their intellectual
capital and decentralized knowledge”.
Whole Foods business model and management operates under these principles:
Self directed teams: competition -and collaboration.
The fundamental work unit of the company is the self-directed Team. Teams meet
regularly to discuss issues, solve problems and appreciate each other’s contributions.
Every Team Member belongs to a Team, being very committed to business objectives,
values and performance.
Whole Foods recognizes the importance of smaller tribal groupings to maximize
familiarity and trust. Trust is the glue that holds everything together throughout the
company. They organize their stores –and company- into a variety of interlocking
teams. Most teams have between 6 and 100 team members, and the larger teams are
subdivided further into a variety of sub-teams. The leaders of each team are also
members of the Store Leadership Team and the Store Team Leaders are members of the
Regional Leadership Team. This interlocking team structure continues all the way
upward to the Executive Team at the highest level of the company.
Teams -- and only teams -- have the power to approve new hires for full-time jobs.
Store leaders screen candidates and recommend them for a job on a specific team. But it
takes a two-thirds vote of the team, after what is usually a 30-day trial period, for the
candidate to become a full-time employee. This hiring referendum affects the behaviour
of everyone involved in the process: the job candidate, the team, and the store team
leader. Store leaders take great care not to recommend people they don't think the team
will approve. The team is the cornerstone of Whole Foods Market; thus the team
meeting is where all values come to reality. Each team in all 300 stores meets at least
once a month. Each store meets monthly as a team as well. More often, they are an
opportunity for team members to swap stories, constantly learn analysing guest
comments and job improvement opportunities, solve problems, and share information.
They are central to how stores operate and improve -- an important ritual for promoting
group accountability and reinforcing the company's values. Trust, between team
members and managers, is decisive. At Whole Foods that trust is optimized in this type
of smaller team organizational structure. This is because each person is a vital and

5. Whole
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hospitality
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important member of his or her teams. The success of the team is dependent upon the
invaluable contributions of everyone on the team. Trust is optimized when it flows
between all levels within the organization. Whole Foods structural organization is very
decentralized, the basic operating unit is based on teams; each team such as grocery,
bakery, fruits and vegetables, meat and seafood, cashiers, prepared foods…works as
independent units with much decision power, committed to business objectives, values
and mission. Teams are also fundamental in company improvements and innovation.
Teams compete against their own goals for sales, growth, and productivity; they
compete against different teams in their store and against similar teams in different
stores and regions. This competition is a major reason why performance information is
so available within an open-book-management philosophy. Since every team can
measure other team´s performance, there is a healthy competition among businesses,
comparing performance indicators such as sales, profits, and customer satisfaction…
The main vehicle for competition at Whole Foods is an elaborate system of peer reviews
through which teams benchmark each other. But they also collaborate sharing
knowledge and best practices, as Mackey view: it is natural for people both compete
and collaborate.
Empowerment.
Mackey wrote in an article: “Empowerment must be much, much more than a mere
slogan, however. It should be within the very DNA of the organization. Empowerment
unleashes creativity and innovation and rapidly accelerates the evolution of the
organization. Empowered organizations have tremendous competitive advantage
because they have tapped into levels of energy and commitment which their competitors
usually have difficulty matching”.
Empowerment is also based on Self-responsibility that is, to take responsibility for their
own success and failures. They celebrate success and see failures as opportunities for
growth and recognize that they are responsible for their own happiness and success.
“Business must view people not as resources but as sources”. John Mackey said. “A
resource is like a lump of coal; you use it and it’s gone. A source is like the sun –
virtually inexhaustible and continually generating energy, light, and warmth. There is no
more powerful source of creative energy in the world than a turned-on, empowered
human being.” Innovations thus happen from bottom up, and merge strategies show up
frequently, since all this working freedom allows organizational learning and job
improvement to flourish constantly. When people are expected to take more
responsibility from their jobs, they normally boost their strengths making the company
working processes advance better. Organizations such WF believes in workers and team
self-responsibility, self-management and empowerment. People don’t need to be
controlled or supervised in order to ensure job performance. Paradoxically, those
companies that empower their workers-and reduce bureaucratic controls- are the ones
having more control. The style of management based more on command and control,
has the pretension of better controlling jobs and workers performance, but the reality is
that, once the manager or supervisor is not there to control, performance certainly
decreases. A sort of self-fulfilling prophecy takes its place. Contrary to this mind-set and
as a direct consequence of trusting in workers we have companies like WF that over-
perform expecting from teams and individuals self-management. Mackey referred to
Control by saying: “Conscious managers exercise a minimal amount of control. Their

6. role is not to control other people; it is to create the conditions that allow for more self-
management”. Their conditions are basically based on strong and shared values, as well
as greater sense of responsibility from each one of the team members.
Customer -and product- experience.
Whole Foods is very committed with Peter Drucker statement, which said that the only
business purpose is to create a customer. Customers are the reason for being of every
business. Without customers there is no business, nor employments.
Part of Whole Foods' success, part of its style, is to constantly up the bar in terms of the
kinds of foods it offers, how it presents that food, and what it tells you about how the
food got to the store. Satisfying and delighting their customers, is it´s primary core
value. WF writes about customers on its Web: “They are their most important
stakeholders in our business and the lifeblood of our business. Only by satisfying our
customers first do we have the opportunity to satisfy the needs of our other
stakeholders”. It is the first commitment of all employees, serving customers and
informing them about the advantages of the healthy food that they are selling. Whole
Foods team members are the best ambassadors of their brand; they are the best “actors
and actress” of this “performance” –they called it, of selling food to customers. It is not
just selling food, it is about fulfilling the company's purpose and core values, and they
do it with passion, transmitting it to their guests. Service to customers though becomes
more natural and authentic since it´s deeply rooted in employees’ behaviour. Whole
Foods Market is passionate about helping people to eat well, improve the quality of
their lives, and increase their lifespan. Passion is the right word to show how service is
provide to guests. Their purpose is to teach people that what they put into their bodies
makes a difference, not only to their health and to that of the people who supply the
food, but also to the health of the planet as a whole.
Transparency.
There isn’t sufficient trust between team members and mangers without the proper
transparency. As Mackey stated, “if we want to optimize trust then we must optimize
transparency” Many companies act in the opposite way, hiding information, or selecting
some people to whom trust and share relevant information. This lack of honest,
authentic communication and transparency usually boomerangs, however, and
undermines trust and creates cynicism. But in WF, such grade of trust it´s shown
everyday to all team members, by acting with full transparency throughout all working
activities.
The open-salary policy is undeniably radical. But its trust-building payoff is substantial.
CEO Mackey initiated the policy in 1986: "I kept hearing from people who thought I
was making so much money. Finally, I just said, 'Here's what I'm making; here's what
Craig Weller –co-funder-is making -- heck, here's what everybody's making.'" All
salaries are open; if someone is making more money it is because he or she is
performing better within his or her team.
By sharing much information, do we risk revealing important information to
competitors? Maybe, but overall the advantages outweigh the drawbacks. Mackey make

7. Whole
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it clear writing: “The high-trust organization takes the risk of revealing too much
information. We must be willing to take the risk that some valuable information may
fall into the wrong hands because our commitment to empowerment and trust
necessitates taking that risk. Creating transparency and authentic communication is an
ongoing challenge that every organization faces. We must continually strive to remove
the barriers that prevent it, knowing that we can't maintain high levels of organizational
trust without it.”
Innovation.
Innovation is a purpose that affects everyone. It is not a business task only assigned to
centralized offices, coming from the top-down. Contrary to this tayloristic view, WF's
basic unit is the team within a very decentralized organization structure. Teams,
especially teams, are responsible for improving jobs and developing new ideas –
respecting core values. Innovation thus happens as a social process within a team, in-
group, and by analysing jobs and guest feedback. Innovation is democratized and
expected to happen, especially, from the bottom-up. Here is how Mackey sees it:
“Imagine the impact if every single person working for a company were able to be a
creator and innovator. Team members should be enabled, empowered, and challenged to
unleash their entrepreneurial energy and their creativity to help improve their team,
store and company”.
The common wisdom about innovation is either by focusing on the result, forgetting
that first of all it is a process -indeed a social process, or referring innovation to
technology or technological industries. But innovation refers also small working
improvements seeking to provide more value to your guests. That is how WF focuses on
innovation, by developing ideas that appeared as a job reflection, and closely, monitors
it. Then, if the idea has been proved with measured results, they may share it as the best
practice. John Mackey also demystifies the common view about innovation by saying:
“In the United States, there is a myth of the lone genius coming up with brilliant ideas
that change the world. While that occasionally happens, the more common scenario is
that an individual comes up with an idea and shares it with other members of his or her
team; they become excited and improve upon it. The spirit of collaboration allows the
idea to evolve and mature”.
Innovation has basically two financial purposes: (1) to increase revenues by providing
more value to guests, and (2) to reduce costs by making operations more effective. All
teams and members are focusing their efforts on them.